Treasury Yields Climb as Fed Holds Rates Steady

'SERIOUS CONVERSATIONS'

Source: Reuters

Jan 28 (Reuters) - Gold prices climbed above $5,300 per ounce for the first time on Wednesday, propelled by economic and geopolitical uncertainty, while markets absorbed the Federal Reserve's latest rate verdict.

Spot gold was up 2.2% at $5,301.60 an ounce by 2:40 p.m. ET (1940 GMT) after touching a record $5,325.56.

U.S. gold futures for February settled 4.3% higher at $5,303.60.

"The rally in the precious metals have kind of taken on a life of their own at this point," said Peter Grant, vice president and senior metals strategist at Zaner Metals.

Gold remains overbought and vulnerable to a correction, but strong buying interest during dips continues to favor the upside, with the next target projected at $5,400, Grant added.

The Fed held interest rates steady, citing still-elevated inflation alongside solid economic growth, but gave little indication in its latest policy statement of when borrowing costs might fall again.

Both Governor Christopher Waller, a contender to replace Fed Chair Jerome Powell when his term as central bank chief ends in May, and Governor Stephen Miran, on leave from his job as an economic adviser at the White House, dissented in favor of a quarter-percentage-point rate cut.

"Markets are just oscillating after the Fed statement... No suggestion that the Fed is in any hurry to move again," said Tai Wong, an independent metals trader.

Powell said inflation in December was likely still well above the central bank's 2% target. U.S. President Donald Trump said on Tuesday he would soon announce his pick to replace Powell.

Gold, a safe-haven asset that does not yield interest, typically performs well during periods of low rates. It has gained more than 20% since the start of the year, building on last year's record gains.

Meanwhile, crypto group Tether plans to allocate 10%–15% of its investment portfolio to physical gold, its CEO Paolo Ardoino said, adding to the bullion which it says already backs some of its products.

Spot silver rose 0.7% to $113.78 an ounce after hitting a record high of $117.69 on Monday. Prices gained nearly 60% so far this year.

"Number of silver indicators suggest prices may be due a correction in the short term," analysts at Standard Chartered said in a note.

Spot platinum fell 1% to $2,612.81, having hit a record $2,918.80 on Monday, while palladium rose 3.9% to $2,009.69.

Source: Reuters

Federal Reserve Chair Jerome Powell has offered his first public defense for attending a Supreme Court hearing concerning Fed Governor Lisa Cook, calling the case a pivotal moment for the central bank's independence.

Speaking at his press conference on Wednesday, Powell framed his controversial decision as a necessary stand. "That case is perhaps the most important legal case in the Fed's 113-year history," he stated. "As I thought about it, I thought it might be hard to explain why I didn't attend."

Federal Reserve Chair Jerome Powell addresses the media, explaining his decision to attend a crucial Supreme Court hearing.

Powell's presence at the opening arguments last week drew criticism, most notably from Treasury Secretary Scott Bessent, who called the move a "mistake" that politicized the case.

The Supreme Court Showdown Over a Fed Governor

The legal battle centers on whether President Donald Trump has the authority to fire Cook. This question has significant implications for a president's ability to remove central bank officials and exert control over monetary policy.

During the hearing, Supreme Court justices appeared skeptical of the claim that Trump was within his powers to remove Cook. Trump has officially cited mortgage fraud allegations as the reason for his action, but critics believe the move is linked to his public push for lower interest rates. The Supreme Court had previously allowed Cook to remain in her position while awaiting the oral arguments.

A Two-Pronged Threat to Fed Autonomy

The attempted removal of Cook is not the only source of political pressure on the central bank. Earlier this month, Powell revealed he is facing a federal probe related to renovations at the Fed's headquarters.

Many observers have connected this investigation to Trump's repeated criticism of Powell for not cutting interest rates more quickly. Together, the criminal investigation and the attempt to oust a governor have fueled concerns that the Federal Reserve's long-held apolitical status is under threat.

Why Independence Matters

During Wednesday's press conference, Powell emphasized that political separation is essential for the Fed's long-term credibility.

"The point of independence is not to protect policymakers or anything like that," Powell explained. "It just is that every advanced economy (and) democracy in the world has come around to this common practice."

He warned that if the central bank loses that separation, "it would be hard to restore the credibility of the institution."

With his own term as chair ending in May, Powell's comments carried an additional weight. He concluded with pointed advice for whoever might take his place next.

"Don't get pulled into elected politics," Powell urged. "Don't do it."

The Bitcoin and cryptocurrency markets are bracing for a pivotal moment as the U.S. Federal Reserve prepares to announce its first interest rate decision of 2026, followed by a press conference with Chairman Jerome Powell.

While the Fed is widely expected to keep its policy rate unchanged, the real focus is on the forward-looking signals from Powell, which could set the tone for digital assets in the coming months.

No Rate Change Expected, But Focus is on Powell

After implementing three consecutive interest rate cuts beginning in September of last year, the consensus is that the Fed will pause its easing cycle in January. The market anticipates the policy interest rate will hold steady in the 3.50–3.75 percent range.

The economic data supports a cautious stance. With U.S. inflation hovering around 2.7% and the job market showing signs of a slowdown, the central bank has reason to wait and assess incoming information before making its next move.

Olu Sonola, head of U.S. Economic Research at Fitch Ratings, noted that current inflation and employment dynamics will likely keep the Fed on hold during this meeting.

Key Timings for the Announcement

The Federal Reserve will release its decision on January 28, 2026, at 10:00 PM Turkish time. Chairman Jerome Powell is scheduled to begin his verbal statement and press conference thirty minutes later, at 10:30 PM.

Political Pressure Meets Economic Reality

Adding a layer of complexity is the political pressure from U.S. President Donald Trump, who has openly called for rate cuts to support economic growth. Trump recently stated that a "meaningful reduction" in interest rates is essential.

Despite this, the Fed is expected to prioritize its dual mandate of price stability and maximum employment. Economists are watching to see how Powell navigates this dynamic.

• Tim Duy, chief economist at SGH Macro Advisors, suggested Fed officials may adopt a strategy to "pause interest rate cuts and reassess if data changes."

• Karim Basta of III Capital Management believes Powell could signal that current interest rates are "at a good level for now."

• Bloomberg economists Anna Wong and Chris Collins warned that a pause could provoke a fresh wave of criticism from the White House.

Why Powell's Words Matter More Than the Decision

With a rate hold largely priced in by the markets, investors will scrutinize every word from Chairman Powell's press conference for clues about the Fed's future trajectory. This meeting is particularly critical as it is the first since a subpoena was issued concerning building renovations.

Traders will be listening for Powell's commentary on several key issues:

• Future Rate Cuts: Does he leave the door open for a rate cut in March or beyond?

• Economic Outlook: What is his assessment of inflation and economic growth?

• Political Independence: How will he address Trump's calls for lower rates and defend the central bank's autonomy?

• Personal Future: What are his plans after his term ends in May?

Ultimately, Powell’s stance on these topics will provide the guidance that shapes the direction of Bitcoin and the broader cryptocurrency market.

U.S. Treasury prices fell on Wednesday, pushing the yield on the benchmark 10-year note up by 2.8 basis points to 4.251%. The move came as the Federal Reserve announced its widely expected decision to keep interest rates unchanged, and as investors appeared to favor gold over government debt as a primary safe-haven asset.

Bond prices trended lower for most of the session before recovering some ground near the close. While government bonds typically attract buyers during times of geopolitical turmoil, the continued surge in gold prices suggests the precious metal is currently the preferred hedge.

Federal Reserve Pauses Rate Cuts Amid Uncertainty

The main driver for the bond market was the Federal Reserve's decision to maintain the federal funds rate in its current target range of 3.50% to 3.75%. This move marks a pause after a series of three consecutive quarter-point rate reductions.

In its statement, the central bank cited "elevated uncertainty about the economic outlook" as the key reason for holding rates steady. Officials also reaffirmed their focus on the dual mandate of achieving maximum employment while ensuring inflation returns to its 2% long-term target.

A Divided Board: Two Governors Voted for a Cut

The decision to pause was not unanimous. Federal Reserve Governors Stephen I. Miran and Christopher J. Waller dissented from the majority, indicating they preferred another quarter-point rate cut.

Market Outlook and Expert Analysis

Mike Fratantoni, SVP and Chief Economist at the Mortgage Bankers Association, commented that there seems to be a "clear and consistent majority in favor of a pause in this rate-cutting cycle."

He suggested this pause will likely continue "unless or until the job market weakens further." Fratantoni added, "With inflation remaining elevated, the FOMC majority does not seem in any rush to make further rate moves."

Market sentiment aligns with this view. According to CME Group's FedWatch Tool, investors currently expect the Fed to keep rates on hold until after Chairman Jerome Powell's term ends in May.

What to Watch Next

Looking ahead, traders will be closely watching several key economic reports on Thursday. The market's direction could be influenced by new data on weekly jobless claims, the U.S. trade deficit, and factory orders.

A senior UN official has warned the Security Council that the fragile ceasefire in Gaza is in danger of collapsing due to severe humanitarian shortfalls, ongoing Israeli military operations, and growing restrictions on aid delivery.

Ramiz Alakhbarov, the UN's deputy special coordinator for the Middle East peace process, reported on Wednesday that conditions are also deteriorating in the occupied West Bank, where violence and settlement expansions are accelerating. While acknowledging some improvements in aid volume reaching Gaza, Alakhbarov stressed that far more is needed to address the crisis.

Gaza's Humanitarian Crisis Deepens

Despite a halt in major hostilities, aid agencies are struggling to operate at scale in Gaza, where nearly the entire population depends on humanitarian assistance. An estimated 1.5 million displaced Palestinians are living in inadequate shelters, their suffering intensified by heavy rain and cold winter weather.

Alakhbarov detailed how families are struggling to keep tents from collapsing in the wind and rain. The delivery of essential construction materials and technical expertise is restricted, preventing emergency sites from meeting even minimal international standards.

Humanitarian operations face multiple obstacles, including:

• Insecurity on the ground

• Customs delays

• A limited number of entry routes into Gaza

• Israeli restrictions on which organizations can bring in supplies

Aid entering from Jordan, for example, represents just 9% of the total assistance processed since October 10. Alakhbarov described the current aid volumes as "only a fraction" of what was previously achieved. Critical items like mobile homes, fuel, rescue equipment, and medical supplies face severe entry restrictions, endangering displaced people and patients.

Ceasefire Under Strain as Hostilities Continue

The ceasefire agreement reached in October has not fully stopped military activity. Alakhbarov confirmed that Israeli airstrikes, shelling, and gunfire continue across Gaza, alongside armed exchanges between Israeli forces and Palestinian militants. Daily attacks persist near the "yellow line" that separates Israeli-controlled areas from those restricted to the Palestinian population.

"Hundreds of Palestinians have been killed since the ceasefire began, including many women and children," Alakhbarov told the council.

He also raised an alarm over Israel's decision to suspend or review the registration of dozens of international non-governmental organizations. Banning these groups, he warned, would significantly undermine humanitarian efforts across the territory, urging Israel to reverse the decision immediately.

West Bank Tensions Escalate with Raids and Violence

In the occupied West Bank, Alakhbarov said that negative trends are becoming "entrenched daily." He cited intensified Israeli military operations, settler violence, large-scale arrests, and demolitions as key drivers of instability.

In late December and early January, Israeli forces conducted expanded raids in cities including Jenin, Nablus, Hebron, and Ramallah, often involving live fire and raising serious concerns about the use of lethal force. These operations have resulted in the deaths of Palestinians, including minors. Reports also indicate large-scale arrests, including of children, with allegations of prisoner ill-treatment and deaths in custody.

Palestinian attacks against Israelis have also continued, including deadly ramming and stabbing incidents in northern Israel in late December.

At the same time, intensifying settler violence has forced entire Palestinian communities to flee. In December, repeated attacks led to the displacement of people from Khirbet Yanun in the Nablus governorate. This month, about 80 households were forcibly removed from Ras Ein Al-Auja in the Jordan Valley.

Settlement Expansion and UNRWA Pressure Mount

Alakhbarov described settlement expansions as "rapid and relentless." Israeli authorities have issued tenders for over 4,700 housing units in Area C, which covers more than 60% of the West Bank. This includes thousands of units in the sensitive E1 zone east of Jerusalem, a move the UN warns could sever the geographic connection between the northern and southern West Bank.

Demolitions, land seizures, and evictions in East Jerusalem have further exacerbated territorial fragmentation.

The UN official also condemned what he called an "escalating Israeli campaign" against UNRWA, the UN agency for Palestinian refugees. Actions have included legislation to seize its compounds, raids on its health facilities, and the demolition of its headquarters in East Jerusalem.

"These acts are flagrant violations of international law," Alakhbarov stated, urging Israeli authorities to comply with an International Court of Justice opinion requiring them to facilitate, not obstruct, UNRWA's work.

Fiscal Pressure and Broader Political Risks

Adding to the instability, Israel continues to withhold nearly $2.5 billion in Palestinian clearance revenues—taxes it collects on behalf of the Palestinian Authority. Alakhbarov explained that this refusal is pushing the authority deeper into a fiscal crisis, forcing cuts to public services and salary payments.

He concluded with a stark warning: unless these Israeli policies are urgently addressed, their cumulative effects could jeopardize not only the next phase of the Gaza ceasefire but also any remaining prospects for a two-state solution.